What is a smart-contract approval?

A smart-contract approval gives one blockchain program permission to move a token from your wallet.

For example, a trading app may ask you to approve its exchange contract before it can trade your USDC. A new contract usually needs a new approval, even when the app looks the same.

A little more technical

Token contracts can store an allowance for a spender. The allowance can be limited to an amount or left very large. The approved contract can use that permission only according to the token’s rules, but a bad or compromised contract can still misuse a broad allowance.

Common misunderstanding

An approval is not a completed payment. It is permission that may remain active after one transaction. Check the contract address, the amount and whether the approval is still needed.

Source: Ethereum’s ERC-20 documentation.